Dick’s Sporting Goods (DKS) and Macy’s (M) recently announced their quarterly results that were weak and also provided weak forecasts for the rest of the year. Shares of both the giant retailers fell after the release of the reports. Reasons for the weaker results include theft and more.
Dick’s Sporting Goods reported a fall of 23 percent in profit in the recent quarter. The retailer claimed that slow sales as well as a rise in theft were responsible for the decline in profits. It noted that theft was an “increasingly serious issue impacting many retailers.”
On Tuesday, the sporting goods retailer said that its net income for the quarter was $244 million. Dick’s Sporting Goods had reported $318.5 million in the same quarter last year. The earnings per share reported was $2.82 while analysts had estimated higher earnings of $3.81 per share. Quarterly net sales were at $3.2 billion, a small jump from last year’s $3.1 billion.
Shares of Dick’s Sporting Goods fell by 24 percent after the report was released. CEO Lauren Hobart said that “shrink” had been a “large part” of the reason why the earnings had decreased. Shrink is the industrial term used to describe inventory loss due to shop lifting, theft by employees or return fraud.
Macy’s also reported its second quarter results on Tuesday. Although the popular retailer posted better than expected results, the department store took a cautious outlook. Macy’s said that its credit card division has been facing pressure. The department store is working with its financial partner Citibank to deal with the issue; by adjusting underwriting strategies to decrease its bad debts.
Macy’s reported a net revenue of $5.13 billion that was higher than analysts’ estimates of $5.1 billion. Earnings per share were estimated at $ 0.13 but were better at $0.26. It mentioned that it expects net sales between $22.8 billion and $23.2 billion. It also predicted a lower sales rate year on year, of 6 to 7 percent.
Macy’s shares saw a rise at the premarket but fell by more than 8 percent after trading began. Macy also announced that there would be four new store locations this fall. They would have smaller footprints.
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